Streaming music service Grooveshark has shut down as part of the settlement following its loss of a copyright-infringement lawsuit brought by major labels.

The US-based service had been going for nearly 10 years, but its decision to build a catalogue of music from users’ uploads rather than licensing deals with rights holders led to its demise.

“We started out nearly ten years ago with the goal of helping fans share and discover music. But despite best of intentions, we made very serious mistakes. We failed to secure licenses from rights holders for the vast amount of music on the service. That was wrong. We apologize. Without reservation,” explained a note on the Grooveshark website.

“As part of a settlement agreement with the major record companies, we have agreed to cease operations immediately, wipe clean all of the record companies’ copyrighted works and hand over ownership of this website, our mobile apps and intellectual property, including our patents and copyrights.”

Grooveshark has also encouraged its users to switch to “fan-friendly, affordable services” including Spotify, Deezer, Google Play, Beats Music, Rhapsody and Rdio.

At its peak, Grooveshark was one of the most popular sources for streaming music, claiming 35 million users between 2009 and 2011. In recent years, though, the company saw its apps removed from Google and Apple’s app stores, and was sued for copyright infringement by major labels and music publishers.

The judge in the case ruled that Grooveshark had explicitly encouraged its employees to upload music to the service to stock its catalogue – trumping its defence that it was abiding by “safe harbour” legislation by removing infringing content when notified by the copyright owners.

Behind the music: Why Grooveshark takes a bite out of artists' earnings

The writing was on the wall in late April, however, when the judge in the case ruled that Grooveshark’s “wilful” infringement meant damages could reach up to $150k per song, which, with 4,907 tracks part of the lawsuit, could have meant a maximum damages bill of $736m (£482m).

Now the site is gone for good. Labels, music publishers and companies like Spotify will be hoping that the result will be a new influx of users for licensed streaming services – particularly those with free tiers that were competing with Grooveshark.